Monarch Group overcame “trading headwinds” to return to profit in its first full year of trading under new ownership and a major restructuring.
The business expects underlying earnings for the year to October to come in at more than £40 million before interest and tax.
The figure represents a turnaround of £130 million compared to the losses suffered in the previous year. Monarch said it expects EBITDAR to exceed £140 million.
In a trading update this morning, Monarch described the outlook for this winter as good, though consumers are booking later than usual.
The airline and leisure group admitted the recent terrorist attacks in Paris and affecting Sharm el-Sheikh “have shocked everyone”.
Monarch will not be resuming flights to Sharm el-Sheikh before January 6 and will continue to follow the government’s guidance on this.
The company is hopeful that Sharm el-Sheikh will re-open early in the new year although it will take a while to rebuild the market.
Monarch faced a number of “trading headwinds,” especially during the second half of the year.
The terror attacks in Tunisia closed the country as a destination for UK tourism and increased the overall carrying capacity on other routes, including to Monarch’s heartland destinations.
The Greek eurozone crisis depressed bookings to the country by half for two months in mid-summer.
Turkey and Cyprus were weaker than in 2014 while the European migrant crisis affected bookings across the eastern Mediterranean.
However, the group benefited from the success of the restructure, the tail wind of lower jet fuel prices and a euro exchange rate which proved good value for UK tourists.
“Strong trading this summer delivered higher than forecast core yields and exceeded the group’s gross revenue targets,” Monarch reported.
“Routes to the Canaries and the western Mediterranean performed the best, with more frequencies and improved flight times to the most popular destinations resulting in a 9.5% increase in yields compared to last year.”
The summer season also “exceeded targets” for revenue per seat.
“The absence of charter and long-haul flying allowed Monarch to improve operational performance by better asset utilisation, with two aircraft on standby for the busy summer season,” the company said.
Monarch also improved its on-time performance by nearly seven points year-on-year, with more than 82% of flights departing within 15 minutes of their scheduled departure time.
The latest figures come 14 months after the group came under new ownership Greybull Capital took a 90% stake in the company.
The restructuring involved a radical overhaul of the group’s activities, including rationalisation of its network and fleet, improved revenue management and modernised working practices.
This delivered net savings of around £100 million, with a further benefit of £30 million from lower jet fuel prices. The group’s free cash had improved by £35 million by the end of October.
Chief executive, Andrew Swaffield, said: “I am delighted that we have exceeded our profit expectations for the full year. This has been achieved despite serious challenges in some of our key markets in the eastern Mediterranean.
“Our performance reflects the successful delivery of our turnaround plan, which has permanently removed £200 million in annual costs from the business, and the hard work of all our people. Monarch Group is now firmly on the path to sustainable profitability.”
Monarch has consolidated its tour operating brand under the Monarch name and has driven further efficiencies by centralising marketing functions in Luton.
The company said its tour operating division is now focused on supporting the Monarch scheduled network and building its hotel accommodation portfolio around those locations.
Preparation for delivery of the new fleet of new generation Boeing 737 MAX 8 aircraft is under way, with the first aircraft due to be introduced in 2018.
“Overall, Monarch is on track to build a stronger business – with more year-round flying focused on winter sun, ski and city destinations for the leisure traveller,” the company said.
“There is continued good momentum in the business to build a distinctive European, scheduled leisure carrier under the Monarch brand.”
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